Ardevora’s Lang on investing in the struggling UK retail sector

Star manager Jeremy Lang is playing the theme of UK fashion in his portfolio through ‘rare beast’ online retailer ASOS, which he says can defy the current gloom surrounding the UK high street.

Sales in the UK fashion market declined for the fourth month in a row in September, according to figures from market researcher Kantar Worldpanel. The data has also not taken into account the recent closure of department store BHS.

The falling pound following the unexpected Brexit vote is also likely to exacerbate the woes for UK retailers, due to the rising price of imports.

However, Lang – founder and partner of Ardevora Asset Management – believes the online fashion retailer ASOS is different to most competitors in the space, particularly those still dominating the UK high street.

While the business previously struggled to cope with its rapid growth, leading to a 70 per cent share price fall in 2014, Lang says ASOS – a 4.4 per cent position in the Ardevora UK Equity fund – has addressed its growing pains.

“Management has focused on execution first, and growth second. An efficient delivery service has helped drive rapid sales growth, which has enabled the business to invest further in customer service and increase the brands on offer. This in turn has driven further sales growth,” Lang says.

“Today the company is going through a phase of high growth and this makes it a rare beast in the UK equity market. ASOS looks genuinely different to us. It is growing in a way which is unusual and winning market share from competitors, who have legacy business models, which are trying to adjust to a world where the internet is increasingly determining how people shop.”